Nvidia has officially acquired Hugging Face, and the two companies say there are two reasons the deal makes sense.
After weeks of reports about an impending tie-up, Nvidia and Hugging Face made things final on Thursday, announcing that the world's leading AI chipmaker had purchased the open-source AI platform in a $12.9 billion acquisition. It's Nvidia's second-largest acquisition ever, after its $20 billion purchase of Groq in December.
Naturally, the deal has spurred fears about centralization of power and resources, since Nvidia is one of the handful of big winners benefiting from the current AI boom. Open models are viewed as one of the ways to counterbalance AI power being concentrated in a few US corporations. In a briefing with the press, both Nvidia and Hugging Face went to great lengths to assuage those fears, since the future trajectory of Hugging Face depends on earning and retaining the trust of developers and AI builders at the grass roots across the global tech ecosystem.
But both companies emphasized that Hugging Face being part of Nvidia has two benefits:
- It gives Hugging Face access to compute that it needs so users can keep experimenting with training, fine-tuning, and customizing open models.
- It allows Hugging Face to scale to a lot more users in the years ahead when open models are poised to play a much larger role in the AI ecosystem. In order to get there, CEO Clem Delangue said on X that Hugging Face "needs more compute, more support, more collaboration and more visibility." Today, Hugging Face has 200,000 companies using the platform and its goal is to 5x in the next few years.
In his blog post about the deal, Nvidia CEO Jensen Huang addressed the elephant in the room about whether Nvidia would try to manipulate the open model ecosystem to serve its commercial purposes. "Hugging Face will remain an open platform for the entire AI ecosystem," wrote Huang. "Developers will choose the models they want, the frameworks they want, the clouds and inference service providers they want and the computing platforms they want. NVIDIA compute will not be required to build on or deploy through Hugging Face."
Delangue also doubled down on Hugging Face's grassroots mission, saying it's not good for the AI ecosystem to consolidate around a few proprietary models. In the press briefing, he said, "We allow AI to be more distributed throughout the world and avoid too much concentration of power."
Our Deeper View
It's noteworthy that Hugging Face reportedly turned down a $500 million investment by Nvidia that would have valued the company at $7 billion in late 2025 because it didn't want a single investor to have too much sway over its decision-making. What's changed since then? The AI ecosystem has accelerated dramatically, with the pace of AI models quickening, venture funding increasing, and a new wave of open models launching. Hugging needed a reliable scaling partner, and Huang's leading role in July in calling for the AI industry and the US government to support open models likely helped give Hugging Face confidence in Nvidia's open-source stance. While I believe both companies are sincere in their rhetoric about open models, there's still long-term concern that there will be gravity pulling the platform into being a revenue driver for one of the world's most valuable public companies. And that could naturally lead Hugging Face toward choices it wouldn't make if its top priority was to simply provide an open ecosystem for AI builders.